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Britons placing too many retirement eggs in property basket
22 July 2008 11:00
Many people plan to use their property to fund their retirements, according to a new study, but they could be caught out if the current housing market slowdown worsens.
One in three Britons surveyed by Friends Provident expected to draw their main income after giving up work from property or equity release, whereas two out of three had not even started saving for their retirements yet.
This state of affairs could prove disastrous if the house price falls in evidence since last autumn should reach the scale seen during the 1992 property slump, as this would leave the typical owner with an estimated £89,950 equity shortfall in their home.
Friends Provident's Jeremy Woods warned that these findings pointed to a potential future crisis and warned people against being over-reliant on property to finance their retirements in light of both falling house prices and the credit crunch.
However, there is some disagreement over the scale of the negative equity threat, with recent data from GE Money indicating that someone who bought their home in 2004 would typically have to see its value dip by 48 per cent before it fell below their mortgage balance.
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